✦ HVAC and the Fifth LineThin moat

Home Depot (HD) — the future bets

Home Depot's distributor paid about $1.1 billion to add heating and cooling, cutting roofing to 39% of its sales.

The most recent acquisition extends the Pro strategy into a new trade. On 11 May 2026 SRS completed the acquisition of Mingledorff's, a leading wholesale distributor of HVAC equipment, parts, and supplies across the southeastern U.S.1, for total preliminary cash purchase consideration of approximately $1.1 billion2. It recorded $410 million of intangible assets and $412 million of goodwill3.

Mingledorffs purchase, preliminary ($M)about 1,100Consideration412Goodwill410IntangiblesHome Depot Q2 fiscal 2026 Form 10-Q, acquisition note
Three-quarters of the price is goodwill and intangibles.

SRS is now organised into five lines of business: roofing and building products, interior and construction products, landscape, pool, and HVAC products4. Roofing was about 68% of Other segment sales in fiscal 2024 and about 39% in the second quarter of fiscal 202656.

The appeal is diversification. HVAC replacement is driven by equipment age and weather, a different cycle from roofing and from home remodelling.

The cost is familiar. Most of the price went to goodwill and intangibles, like SRS and GMS before it, and the returns will depend on the same integration the Office of Pro Acceleration is meant to deliver.

The intangibles are being written off slowly. Home Depot is amortising the Mingledorff's intangible assets over 21 years7, which keeps the annual charge small but long. Net sales from the acquisition were among the drivers of growth in the second quarter of fiscal 20268.

This is a thin bet so far, a small purchase in a large trade. The share of roofing in Other segment sales is the measure; if it keeps falling while the segment's margin rises, diversification is paying.

Moat trajectory: Widening

Fifth SRS line added May 2026; roofing share falling.

The number that tests this moat
Reported
Roofing share of Other segment sales, latest quarter
About 39% (Q2 fiscal 2026) against about 53% in fiscal 2025

Diversification of the distributors; a falling roofing share with a rising margin would show it pays.

Source: Home Depot Form 10-Q, Q2 fiscal 2026 ↗
References
  1. ReportedOn 11 May 2026 SRS completed the acquisition of Mingledorff's, a leading wholesale distributor of HVAC equipment, parts, and supplies across the southeastern U.S., for total preliminary cash purchase consideration of approximately $1.1 billion.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  2. ReportedOn 11 May 2026 SRS completed the acquisition of Mingledorff's, a leading wholesale distributor of HVAC equipment, parts, and supplies across the southeastern U.S., for total preliminary cash purchase consideration of approximately $1.1 billion.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  3. ReportedIt recorded $410 million of intangible assets and $412 million of goodwill.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  4. ReportedSRS is now organised into five lines of business: roofing and building products, interior and construction products, landscape, pool, and HVAC products.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  5. ReportedRoofing was about 68% of Other segment sales in fiscal 2024 and about 39% in the second quarter of fiscal 2026.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 7 MD&A: segments, comparable sales, transactions, product lines, margins and ROIC. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  6. ReportedRoofing was about 68% of Other segment sales in fiscal 2024 and about 39% in the second quarter of fiscal 2026.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  7. ReportedHome Depot is amortising the Mingledorff's intangible assets over 21 years, which keeps the annual charge small but long.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  8. ReportedNet sales from the acquisition were among the drivers of growth in the second quarter of fiscal 2026.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
Sources
Generated September 26, 2026